Could streaming move AppleTV from hobby to serious business?

A new rumor suggests Apple will slim down the Apple TV hardware and price. …

A new rumor suggests that Apple plans to use iPad internals and a version of iPhone OS to power the next revision of its AppleTV set-top box. The rumor also claims that Apple will ditch internal storage for a streaming-only solution. And this new hardware will only cost $99.

These changes are in some ways obvious, but will it be enough to move the AppleTV out from under its "hobby-only" designation? Probably not, unless Apple is committed to freeing it from its iTunes Store reliance.

The hardware

Acording to Engadget's sources, the new Apple TV will be based on the same A4 processor currently used in the iPad and expected to appear in the next iPhone. It's also said to be 1080p capable, which is certainly possible if Apple includes a PowerVR VXD core or uses some other video decoding chip. And, since the hardware would essentially be a variation of the iPhone/iPad hardware, it makes sense that Apple would use the iPhone OS—already stripped down and optimized for media playback on ARM hardware—in place of the current Mac OS X variant running a version of Apple's Front Row software.

The hardware is also said to be very slim, bearing only a power in and video-out port. (Our guess is it would have more than this, but given the recent proliferation of HDTVs, Apple could possibly get away with just an HDMI port.) This is certainly feasible if the hardware is based on the tiny logic boards used in the iPad or iPhone, but it also helps that Apple apparently plans to ditch the internal hard drive storage for enough flash—about 16GB—to buffer a couple movies or several TV shows.

If you cut out the battery and display from an iPad and package it in a tiny casing, the rumored $99 pricing seems doable. Essentially cutting the cost of an Apple TV in half, it's a good bet that Apple could sell a lot more of them.

Ditching the internal storage and moving to solely streaming sources would certainly dash the hopes of those that want Apple to add DVR functionality to the Apple TV. However, that may not matter as much if all the shows and movies you watch are either on a computer on your network or in the cloud.

Engadget's sources don't explicitly state this, but it seems likely that a revised Apple TV would still stream media from a local Mac—there's no good reason for Apple to eliminate this integration. Inexplicably, the sources do claim that a Time Capsule could be used for media storage, though a Time Capsule wouldn't make for the best media NAS on the planet.

Streaming only

The suggestion is that a revised Apple TV would also stream content from the cloud. This ties in with a number of rumors that Apple plans to launch a streaming media service connected to iTunes. Such a cloud service, serving as a companion to directly downloading media to your computer from the iTunes Store, would conceivably allow streaming any media you paid for to any Web browser or any convenient device, such as an iPhone, iPod touch, iPad, or yes, an Apple TV.

A recently revealed Apple patent suggests Apple has put some thought into how a streaming media service might work, describing features like clicking on a button while watching a trailer to watch a movie, or pausing a video on one device and picking back up from that same spot on another. Kaufman Bros analyst Shaw Wu is predicting that Apple might be ready to show off a streaming service dubbed "iTunes.com," at WWDC in a couple weeks. The time is certainly ripe for Apple to move in this direction.

There are some problems with this scenario, however. Apple is building a huge data center in North Carolina; little is known about what Apple plans to use it for, but its massive size certainly suggests that it could power a streaming media service. Still, relying on just one massive data center also represents a single point of failure if something were to happen—cables get cut, power goes out, etc.

Furthermore, Apple hasn't been nearly as successful with its own forays into cloud services as its newest nemesis, Google, has been. The launch of MobileMe suffered serious problems with connectivity and a potential for data loss, though it seems those have been overcome. Apple's only other major cloud service, iWork.com, is still in beta and offers nowhere near the kinds of capabilities that Google Docs does. Apple's acquisition of Lala may have put some more knowledgeable engineers that have run a successful cloud service on Apple's payroll, but we're not yet persuaded Apple is ready to become a major player in this space.

For the sake of argument, however, let's say that that Apple can launch a successful cloud-based version of iTunes with the NC data center combined with a content delivery network partnership like Apple already has with Akamai and Limelight and the cloud know-how of former Lala engineers. If the Apple TV merely switches to streaming iTunes content directly to the device from the cloud, it wouldn't address one of the major complaints that most Apple TV users have, which is access to additional sources of content outside the iTunes Store.

One of the big reasons I have personally stuck with my Roku streaming player instead of opting for an Apple TV is that I can stream a rather large library of TV and movie titles from Netflix. Most of what I can't get from Netflix, I can buy from Amazon Video on Demand. When neither of those options work, I can always watch something on Hulu (though it would be even better if I could do that directly on my Roku box—are you paying attention, Hulu?).

With affordable, multisource devices like Roku and now GoogleTV to compete with, Apple needs to get serious about enabling more content sources for its set-top box. With an iPad/iPhone-based architecture, services like Netflix or ABC could build plug-ins to access content based on the successful iPad apps already available in the App Store. Such a move might mean lower sales for the iTunes Store from current Apple TV users, but Apple has always suggested that the iTunes Store helps sell hardware, not the other way around. And having more sources for more content will absolutely move more Apple TV hardware.

So, if Apple makes slimmer, iPad or iPhone-based Apple TV hardware? That sounds good. And sells it for a sensible $99 price? That definitely sweetens the deal. Continues to limit it to iTunes Store content only? We'll pass.

132 Reader Comments

If they would also announce a stream-whatever-videocontent-you-want-for-small-amount-of-$-a-month subscription, then it would be really interesting! Too bad they still don't have movies here in the Netherlands.

I just signed up to Spotify for unlimited music streaming and it's so relaxing to be able to legally just play whatever you like while still supporting the artists properly.

On the plus side:Air Video on my iPad and iMac works very well for streaming video. It does make me think about the possibilities of streaming. Apple has re-purposed portable hardware before. Look at Apple's first iMac. It was based on Apple's current laptop parts, stuck to the bottom of a CRT.

On the minus side:It's Apple silly season right now. I hear that Eric Schmidt and Lady Gaga are going to introduce this new Mac TV at MWDC.

The problem with any of these devices is that none of them have DVR/Cablecard functionality, and I don't want yet another device just to stream some YouTube movies onto my TV. I don't care if it's made by Apple, Roku, Sony, Google, Microsoft, Exxon, Dunder Mifflin, Santa Claus, or yo mama.

Bottom line: I have a Tivo HD. It's not a great UI, but IMO it's the best DVR UI out there. So that's my default device, and since it already does Netflix streaming, I have no reason to switch to another device (no matter how well designed) just for that service.

I imagine Apple could design a better Tivo than Tivo, but they clearly have no interest in doing so since cable TV is "yesterday's media" (that will nevertheless be the primary source of video for the next decade). Even at $99, it's going to need some pretty nice/unexpected features before I'll buy...

I have a AppleTV but don't use it anymore after getting one of these http://www.wdtvlive.com/It doesn't have its own store but can play almost all formats including .mkv and .vob from network storage or USB attached storage.Its interface kinda sucks but it gets the job done.

XBMC works well on the AppleTV, and will already handle all 1080p content with the addition of a Broadcom Crystal HD. For the size and abilities, it's a good device.

Why anyone just has an AppleTV with the default software is beyond me.

We've had an TV for a long time and we use it all the time. It's very useful to us because....... we buy (almost) all our TV shows and movies and music on iTunes. For stuff like Netflix and Hulu we have a new mini. Technically we could use the mini for most of the stuff we use the TV for, but the TV's interface is a lot better than anything on the mini (including Boxee, FrontRow and just using vanilla apps like iTunes, et cetera).

Interesting how more and more articles about new TV devices fail to even mention everyone's favorite bag of hurt (not to mention standard-def DVDs). How is it that inclusion of simple BD playback hardware isn't in the equation? I would have guessed it'd be at commodity status by now, but maybe the licensing is a killer.

Streaming HD video with most current US ISPs is a giant fail, and with Verizon dropping plans for any further expansion of FiOS I doubt the situation will improve in any meaningful fashion in the next decade or more. So even if everything I want to watch suddenly became available from the iTunes store in an acceptable form (ie rentals instead of purchases for TV shows), I don't think this theoretical new Apple TV box would be worth purchasing.

Which makes me another of those people who think it's a crying shame that Apple obviously has no interest in adding DVR functionality to the AppleTV. Apple is basically the only company I think could realistically make a better DVR than TiVo, and DVRs are going to continue to be a requirement as long as the media conglomerates and MVPDs work so hard to maintain their existing business models.

As soon as somebody builds the infrastructure that could support an HD stream I might be interested. Thing is I already have an AppleTV and a current spec HD movie takes hours to download. 1080p would just take more hours. If the gnomes at Apple really think this kind of streaming would work they need to come out here to the hinterlands and take a look at the frayed 30 year old wire that provides internet access to my house.

I'll hold onto my ps3 with eyeTV for a dvr plus netlix streaming. Until somebody finally gets it right, this box will suffice. Funny thing is, it already has enough processing power and network bandwidth to serve this need for the next decade or more.

All we need is for someone to offer streaming at a reasonable price. With fios and a ps3, i should be able to play anything anytime. If only the content owners didn't have their heads up their collective asses. The technology is here, my wallet is in hand... But for some reason they refuse to take my money!?

I had hope that apple would fix this industry like they did the music industry. But for some reason, it hasn't panned out. Because i've dropped my cable subscription entirely, content owners are really screwing themselves. My story will likely become increasingly common. Kids today? They'll take the internet over tv when push comes to shove. The only question is, which corporation will realize this first and finally succeed in providing a reasonably priced streaming service?

As soon as somebody builds the infrastructure that could support an HD stream I might be interested. Thing is I already have an AppleTV and a current spec HD movie takes hours to download. 1080p would just take more hours. If the gnomes at Apple really think this kind of streaming would work they need to come out here to the hinterlands and take a look at the frayed 30 year old wire that provides internet access to my house.

I'm sympathetic to your situation.

But also realize that tens of millions of Americans can stream HD video with no trouble at all. So while it isn't possible for many, perhaps even most, the market still exists.

As soon as somebody builds the infrastructure that could support an HD stream I might be interested. Thing is I already have an AppleTV and a current spec HD movie takes hours to download. 1080p would just take more hours. If the gnomes at Apple really think this kind of streaming would work they need to come out here to the hinterlands and take a look at the frayed 30 year old wire that provides internet access to my house.

I'm with you. No way I could stream HD with the barely serviceable DSL I have.

Dfiler doesn't know how good he has it. I'd switch to FiOS in a heartbeat if I had the chance.

One of the big reasons I have personally stuck with my Roku streaming player instead of opting for an Apple TV is that I can stream a rather large library of TV and movie titles from Netflix. Most of what I can't get from Netflix, I can buy from Amazon Video on Demand. When neither of those options work, I can always watch something on Hulu (though it would be even better if I could do that directly on my Roku box—are you paying attention, Hulu?).

But wouldn't that be solved by an AppStore for AppleTV, which would suddenly be possible thanks to the iPhone OS adoption? Netflix works great on the iPad. And there are a handful of other apps. Having yet another device to target, there might be even more of this kind of apps coming out.

While opening AppleTV up to more streaming sources (possibly through an app store style model) would obviously be a good thing, the possibility of iTMS-only streaming is not necessarily a dealbreaker. It would ultimately come down to what and how much content they're able to license. I have a Netflix subscription basically only for the instant viewing, and if Apple's box could provide a similar amount and quality of content, I wouldn't be complaining. All other things being equal, I'm much happier to stream my video content than to store it. I certainly don't have any need to purchase the amount of storage capacity it would take to hold all of the shows I regularly watch on Hulu/Netflix.

As soon as somebody builds the infrastructure that could support an HD stream I might be interested. Thing is I already have an AppleTV and a current spec HD movie takes hours to download. 1080p would just take more hours.

The technology already exists today, and Microsoft offers HD streaming on the Xbox 360. It works surprisingly well. Movies start instantly, and look really good. I was really surprised when I rented a HD movie with it. Here is a demo you can watch on your computer (Requires Silverlight):

I'm with you. No way I could stream HD with the barely serviceable DSL I have.

Dfiler doesn't know how good he has it. I'd switch to FiOS in a heartbeat if I had the chance.

Of course I know how good I've got it.

It's hard to make this point without it seeming like gloating, but IP based video streaming is a viable market. No matter how many people rightfully lament that they aren't a part of that market, that doesn't change the fact that millions of others do have sufficient bandwidth.

I understand the urge to post bandwidth complaints in response to these articles. But is it really contributing to the discussion? Garage door openers don't help manhattan commuters, but would it make sense for them to respond to garage stories with something like "I'd love to have an opener but can't".

The above is ment as a friendly joke, but there is some truth to it as well.

I had hope that apple would fix this industry like they did the music industry. But for some reason, it hasn't panned out. Because i've dropped my cable subscription entirely, content owners are really screwing themselves. My story will likely become increasingly common. Kids today? They'll take the internet over tv when push comes to shove. The only question is, which corporation will realize this first and finally succeed in providing a reasonably priced streaming service?

Yep, wallet is in hand... They just won't take my money!

1) The media industry will not want to replace an expensive cable service with cheaper internet streaming2) The cable industry won't want to sell internet when they could sell you cable and internet (read: caps)3) I don't think the typical internal connection can provide the same experience a cable connection can (for now)

I would love an a la carte video option for $30 a month or so. But my cable+internet is $100 a month. The entrenched interest to keep it at that level is strong. Apple may have the power to crack this market, but in the mobile industry for example, they showed no desire to break the the prices. Rather, they used the high prices to subsidize their hardware.

1) The media industry will not want to replace an expensive cable service with cheaper internet streaming2) The cable industry won't want to sell internet when they could sell you cable and internet (read: caps)3) I don't think the typical internal connection can provide the same experience a cable connection can (for now)

Of course they don't want to. That's what my whole post was lamenting... Followed by pointing out that more and more people are dropping there cable tv service. Quite a few major media outlets have run stories on it in the last year.

Sure, most Internet connections might not be sufficient. But the market still numbers in the tens of millions. Plenty of companies are actively serving it... The problem is that the content owners are dragging their feet. Nearly every sinle major electronics company and media conglomerate is in the game already. They just haven't gotten the equation right. That's right, they're already serving that market, just incredibly poorly.

This is exactly what I've been waiting for. With an Apple TV running IPhone 4 OS, the sky is the limit!

Music and video streaming is just the tip of the iceberg. It's about the APPS. Who cares if people aren't buying iTunes media per se? They buy apps to run on the Apple TV, for example:1. Games (takes on Nintendo/Sony/XBox)2. News outlets (CNN App, Fox News App, NPR etc.)3. Network Apps for TV Shows (Abc.com App, NBC.com app, Hulu)4. Netflix5. Pandora or similar6. Safari browsing.

Good lord the possibilities are endless because Apple will have developers standing in line to develop creative apps for it. Apple will make billions on the thing. People will feel comfortable with it too, because they already know how to use it...

1) The media industry will not want to replace an expensive cable service with cheaper internet streaming2) The cable industry won't want to sell internet when they could sell you cable and internet (read: caps)3) I don't think the typical internal connection can provide the same experience a cable connection can (for now)

Of course they don't want to. That's what my whole post was lamenting... Followed by pointing out that more and more people are dropping there cable tv service. Quite a few major media outlets have run stories on it in the last year.

Sure, most Internet connections might not be sufficient. But the market still numbers in the tens of millions. Plenty of companies are actively serving it... The problem is that the content owners are dragging their feet. Nearly every sinle major electronics company and media conglomerate is in the game already. They just haven't gotten the equation right. That's right, they're already serving that market, just incredibly poorly.

Give it time. If Apple allows the networks to recoup the revenue lost from cable subscriptions, then it's a huge win and they'll move over. For example, what if Apple tells Hulu, with Apple TV you can use iAd or Admob with in your app to advertise on commercial breaks or within your app that you can charge your customers. Would that make the networks happy? Maybe.

Well I've been looking at streaming media players for about two months. All have their good points and bad, but none I've seen so far are the perfect bundle. The flaws could be from technological to nonexistent customer service. A nice piece of convergence would be something that's attractive, quiet, maintenance free, easy to use, plays all the current media out there (DRM included), both source rich and agnostic, and priced reasonable. Now who comes the closest?

at this price point i'm going to assume they expect you to use a real iPhone / iPad / iPod touch as a remote? i certainly don't see the current remote being particularly useful for running iPhone-style applications on a TV.

not that i have a problem with that. makes it more of an iPhone / iPad accessory in a sense.

if it doesn't run Netflix or allow streaming from a non-iTunes source i won't consider it though.

having a normal DNLA client live 360 / PS3 would be ideal. something that requires a computer doing transcoding first like AirVideo would be secondarily ideal.

broad codec/container support would be awesome... though i'm guessing highly unlikely.

But I somehow don't think streaming up to 50GB per view per movie is going to become standard any time soon.

I agree. Someone mentioned the XBL as an example of HD movie streaming, but that`s only 720p and with most ISPs (at least here in Canada) saddling users with bandwidth caps HD streaming via the internet is still not a viable alternative to Blue-Ray. I still don`t understand Apple`s stubbornness in not offering Blue-Ray with their systems and Apple fans defending it. I have Blue-Ray with both my laptop and desktop and with the relative cheapness of Blue-Ray players and their superior quality to any HD streaming available (at least from what I`ve seen) it`s a no brainer IMO.

"If the Apple TV merely switches to streaming iTunes content directly to the device from the cloud, it wouldn't address one of the major complaints that most Apple TV users have, which is access to additional sources of content outside the iTunes Store."

What?!!! What are you talking about? Seriously, what are you saying? Me and my friends with AppleTVs rip our BluRay discs and stream them over our local networks. Literally any physical media that exists I can get onto my TV or home stereo system via the AppleTV.

If the debate is purchase vs. all you can eat then say that but don't say "additional sources of content" cause that's just not true.

I have a AppleTV but don't use it anymore after getting one of these http://www.wdtvlive.com/It doesn't have its own store but can play almost all formats including .mkv and .vob from network storage or USB attached storage.Its interface kinda sucks but it gets the job done.